Media Money with Julia Boorstin

Hooray for Hollywood! Does "The Biz" Boost the Economy?

The California economy has been suffering with devastatingly high unemployment and foreclosure rates, and a massive budget crisis. Finally, some good news. After months of reporting on how production activity has been fleeing the state, The Los Angeles Economic Development Corp. reports that Hollywood will help the Southern California economy recover over the next few years.

California still has a lot more pain ahead: the LAEDC predicts the state's jobless rate will be 12 percent in 2010. But the silver lining is that after the number of entertainment industry jobs declined last year, in 2010 some 4,000 new workers are expected to get jobs in 'the biz.'

The state government deserves some credit. State tax incentives Schwarzenneger implemented have been useful in keeping TV productions in particular from chasing tax incentives to New York or Canada. NBC is ordering a bunch of pilots to fill the 10 pm Jay Leno slot with scripted programming, helping lift the number of new productions. And as the advertising market recovers commercial production is lifting up as well.

But Hollywood is going to have to work very hard to remain a boost, rather than a drag on the local economy. California's brand new tax credit program to keep productions in state is already running out of cash. Given the state's budget crisis chances that the state will invest the cash in film incentives seem low. Struggling with DVD sales declines and skyrocketing marketing costs, studios are counting their pennies, more eager than ever to chase production incentives. It's unfortunate that the state needs the movie industry more than ever to generate jobs and keep the region the destination for entertainment production.

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